'Matrix' to justify lures for Tennessee jobs

'Matrix' to justify lures for Tennessee jobs

April 19th, 2011 by Andy Sher in News

Gov. Haslam

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NASHVILLE - After weeks of review, Gov. Bill Haslam this week will announce major changes in the state Department of Economic and Community Development's strategy for boosting job growth in Tennessee.

Among other things, the changes are expected to include a "matrix" that quantifies the economic payoffs to the public in order to justify the millions of state taxpayer dollars given to companies either recruited to Tennessee or which are expanding existing operations.

Haslam administration spokesman David Smith declined comment Monday.

But in a House Finance Committee budget hearing earlier in the day, Economic and Community Development Deputy Commissioner Paula Davis told lawmakers that after a "top to bottom" review," the proposals "will be rolled out later this week. So news will be forthcoming regarding that, also the opportunities involved, regional strategy.

"I just stated earlier we're focusing on rural development and we have an emphasis on existing businesses," Davis said. "It's nice to have the big headlines. It's nice to have the big companies coming to Tennessee and providing the jobs."

But she said "it's also very important in Tennessee that we continue to love all the businesses that are here, that we help them expand and grow in a way so that we can continue to provide jobs to all those rural areas."

During the administration of former Democratic Gov. Phil Bredesen, the state made national headlines in recruiting major new employers through incentives. Hamilton County and Bradley County benefited enormously.

Germany-based Volkswagen announced in 2008 that it was locating a $1 billion auto assembly plant in Hamilton County that would employee 2,000 people. Suppliers are also locating at or near the site.

The Times Free Press estimated the total price tag for incentives offered by the state and Hamilton County, which included state tax credits over 20 years and local property tax abatements over 30 years, the value of the county-owned property and other incentives could top $500 million.

A study conducted by the University of Tennessee's Center for Business and Economic Research projected the state's commitment to provide infrastructure, funds for job training and marketing for the VW plant alone would hit $229.7 million. But the study said the state would see a net benefit over the years.

There were two other $1 billion-plus economic development recruitment coups including the now-$1.45 billion Wacker Chemical plan in Bradley County, which will employ an estimated 650 people, and manufacture polysilicon used to manufacture solar panels. Another polysilicon manufacturer, Hemlock Semiconductor, is building a $1 billion plant in Clarksville.

Currently, Amazon.com Inc. is spending $139 million distribution centers in Hamilton and Bradley counties. All the projects are getting state incentives.

But some rural lawmakers griped that they were being largely passed over.

During his 2010 campaign for governor, Haslam said his use of incentives "will be targeted and based on measurable returns on investment and quantifiable impact on job creation. Taxpayers must be able to see a clear return on any tax dollars used to recruit companies."

He said that "while the billion dollar companies are great to recruit and I will be relentless in similar pursuits, we must remember that two thirds of the new jobs in the country are created by small businesses."

In February, he discussed utilizing a "matrix" to quantify investments.

At the State Funding Board meeting last Tuesday, the matrix came up as the constitutional officers on the panel questioned how much money the state has on hand to meet its state FastTrack commitments to provide job-training and infrastructure funds for companies.

Finance Commissioner Mark Emkes told Economic and Community Development Commissioner Mark Emkes that, "I know since you took over you've worked hard on a matrix to make sure we're attracting good jobs, not just any job. Do these proposals include that new kind of new matrix that you developed or are these sort of left over from the past."

Haggery said that when it came to the list of current commitments, including $6.9 million for Amazon, "none of these proposals do [include Haslam administration projects]. And all of these dollars were committed prior to taking office."

When Haslam came into office, he unexpectedly found himself having to come up with funding for several last-minute Bredesen deals. They included $97 million in state finding for an Electrolux plant in Memphis.

The state also committed $34.6 million in additional funding for the Wacker plant, which is being expanded.

Contact Andy Sher at asher@timesfreepress.com or 615-255-0550.